Trading Tactic Using Money Management and Technical Analysis

Posted on Posted in Stock Market

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Money administration is the main tactic which can be used in conjunction with the general estimation of the price movements. The technical analysis can be used to predict the general direction of the price movement for trading.

For example, the following tactics can be used:

1)  Use the technical indicators likes RSI to determine the overbuy and oversold levels. The value above 70 will indicate an overbought level and the value below 30 is considered as overbought level. Thus appropriate trend reversal opportunities can be found and buy or sell calls can be placed.

2)    The signals from the RSI should be confirmed with MACD or Parabolic SAR. MACD stands for moving average convergence and divergence. The moving averages of two different periods one small and other big are watched for crossovers. Thus expropriate buy and sell calls can be placed confirmed with both RSI and MACD. Similar to MACD the Parabolic SAR can also be used to confirm the trend and place the buy and sell calls.

3)    Once the buy and sell calls are placed the money administration can be used to cover the losses if any. For example, if a buy call is placed and the price goes down, a sell call should be placed with increased quantity. Thus if the price goes down it will cover the loss and will add to the profit.  The process can be repeated until the trade goes in the trader’s favor. The similar process can be repeated if a sell call is placed in the start.

The above tactics can be used with stock market tips provided by the advisory firms. They provide correct intraday trading tips, stock cash tips and equity tips with proper stop loss. Money Classic Research is one such advisory firm which is reputed and is also SEBI registered.

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